- Prime US REIT (SGX:OXMU)'s FY22 DPU of US$0.0655 was slightly below our estimates, mainly due to higher interest expense (+27.2%) and lower occupancies (89.1%).
- Despite portfolio valuation declining 6.7% on higher discount and cap rate assumptions, gearing at 42.1% and interest coverage at 4.1x remains well within regulatory limits.
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- Prime US REIT is our top pick in the US office sector for greater tenant exposure to STEM/TAMI sectors.
The Positives
Strong positive rental reversions of 20.2% for 4Q22,
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- Occupancy remained relatively stable, declining 0.5% q-o-q to 89.1%. Leasing remains active, with activity coming from sectors such as scientific R&D services, finance, biotechnology, manufacturing and legal services.
- The 20.2% reversion was substantially from Crosspoint, where an existing tenant downsized from 84k sq ft to 57.5k sq ft and extended the lease to 2032, and a new tenant backfilled space and signed a lease till 2034 at >25% reversions.
82% of debt is on fixed rate or hedged,
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